The Obama administration is abandoning plans to open the Arctic Ocean to more drilling in the face of dwindling industry interest and massive environmental opposition.
The Interior Department said Friday it is cancelling a pair of scheduled Arctic Ocean lease sales. One was planned for next year to auction rights to drill for oil in the Chukchi Sea off the northern coast of Alaska and the other was for 2017 in the neighboring Beaufort Sea.
At the same time, Interior Secretary Sally Jewell rejected the requests of Shell and Statoil for more time to consider drilling under their current leases. Those leases start expiring in 2017.
The moves come just weeks after Shell announced its pioneering $7 billion Arctic Ocean oil exploration program was a failure. The company said it didn’t find enough oil to justify the cost and was abandoning the offshore Arctic drilling effort “for the foreseeable future.”
“In light of Shell’s announcement, the amount of acreage already under lease and current market conditions, it does not make sense to prepare for lease sales in the Arctic in the next year and a half,” said Interior Secretary Sally Jewell.
The Arctic Ocean is believed to hold huge oil and gas deposits. But low energy prices and high costs have dampened the enthusiasm of oil companies for exploring the Arctic Ocean and the lease sales were expected to draw little interest – especially after Shell’s costly failure.
Rep. Rob Bishop, R-Utah, nevertheless criticized the president for blocking “any hope for future energy development in the Arctic.” He blamed environmental regulations for Shell’s failure.
“Obama has once again played directly into Russia’s hands as he destroys our nation’s energy potential,” said Bishop, who is chairman of the House Committee on Natural Resources.
Senate Energy Committee Chairwoman Lisa Murkowski, R-Alaska, called it a “stunning, short-sighted move.”
“Today’s decision is the latest in a destructive pattern of hostility toward energy production in our state that began the first day this administration took office,” Murkowski said.
There are still potential Arctic Ocean drilling lease sales in 2020 and 2022, under Interior Department plans. Much will depend on the winner of next year’s presidential election. Democratic presidential frontrunner Hillary Clinton has expressed opposition to drilling in the Arctic Ocean, while Republican candidates have either supported the drilling or not weighed in.
Environmental groups hailed Obama’s decision to cancel the lease sales scheduled over the next two years.
“For years, people around the world have been demanding President Obama protect the Alaskan Arctic from catastrophic oil drilling, and today he’s taken a major step,” said Greenpeace spokesman Travis Nichols.